TANKER loadings at alternative ports in the Middle East have risen sharply since attacks on Iran began last week, limiting vessel voyages through the Strait of Hormuz where almost 20% of global crude oil flows.

Data from Vortexa shows a sharp rise in loadings from alternative ports with Yanbu in Saudi Arabia, Fujairah in the UAE and Muscat in Oman recording steep increases in crude oil loadings.

Alternative port loadings rose by almost 80% in the week of March 2 to March 8 compared to the week before, with 6.52m barrels per day lifted this week.

This is almost 90% higher than the average level of 3.44m barrels per day observed since January 2023.

Yanbu tops the list of alternative ports loading crude oil, with 2.72m barrels per day loaded between March 2 and 8, accounting for 42% of alternative port loadings. Fujairah and Muscat loaded 1.9m and 1.25m barrels per day respectively.

Tanker operators have pivoted to alternative ports as global oil supplies tighten with the crisis. The idea of loading crude oil from the Red Sea port of Yanbu was initially floated at the onset of the crisis, but shipping players felt that it was too risky.

Major shipping lines such as Maersk took a decision to avoid the Red Sea because of the attacks on the SOH.

But tanker operators continue to transit through the Red Sea, despite the increased risk.

“We have seen a significant increase in spot fixtures from Yanbu since March 3, primarily for very large crude carriers loadings east. Of course, as the conflict between Iran, the US and Israel continues to escalate, there is an obvious threat of Houthi attacks. Nevertheless, a pool of owners/operators willing to load out of Yanbu is reasonably large,” EA Gibson principal analyst Svetlana Lobaciova told Lloyd’s List.

But these loadings come at a high cost, with Lobaciova noting that freight levels are reflecting a significant risk premium. She said: “For example, our brokers assess Yanbu/East currently at WS450 vs theoretical TD3C assessment at WS470 and TD15 at WS229.”

Tanker asset risk

The higher rates afforded to these sailings hypothetically present an opportunity that tanker owners can capitalise on. But there is more than meets the eye when it comes to jumping on this bandwagon.

A shipbroking analyst told Lloyd’s List that owners and operators with smaller fleets have more risks to consider. He said: “If I was a tanker owner and I only had one tanker, would I want to risk my only asset in a war zone just to capitalise on higher rates?”

The broker also pointed out that because fleet sizes are small, the insurance cost per vessel would be much higher as they do not have the economies of scale that a bigger fleet owner does.

Intermodal noted a rise in loadings “particularly around Yanbu, although sentiment continued to be dominated by geopolitical considerations” in the past week, suggesting that some tanker operators are still mulling this shift.

Vantage Shipbrokers’ research team observed that loadings from Yanbu have mainly been carried out by tankers from Bahri, Saudi Arabia’s national shipping carrier.

It said: “Most liftings are being handled by Bahri’s fleet, while a number of VLCCs and suezmaxes, including Unipec’s contracts of affreightment and some spot-chartered vessels.”

Bahri tankers are likely to dominate exports from Yanbu, given its national significance and Saudi Arabia’s priority to ensure undisrupted oil exports being a net exporter of crude oil.

Aramco’s push for more Yanbu loadings

With attacks on Iran disrupting shipping on the SOH, Saudi Arabia’s national oil company Aramco is looking to push barrels through its East-West Pipeline as east coast refineries wind down operations.

“Immediately as the ports were starting to close, we ramped up production through the East-West Pipeline, which has a capacity up to 7m barrels a day, most of it for export,” president and chief executive Amin Nasser said yesterday on an investor call following Aramco’s fourth-quarter earnings release.

Nasser went on to add that 2m of these barrels will be supplied to existing refineries in the western regions daily, leaving around 5m barrels per day for export.

“We should be reaching capacity in a couple of days. It’s all building on the repositioning of tankers from the east to west,” he added.

Vortexa data shows that the port of Yanbu sees 2.72m barrels per day being loaded, equating to 1.9 cargoes loaded per day. This is around 372,000 tonnes of crude oil being loaded a day.

These figures equate to 1.24 VLCCs being loaded a day, assuming an average VLCC size of 300,000 dwt.

When pipeline flows reach maximum capacity, the 5m barrels available per day would equate to 682,128 tonnes a day. 2.27 VLCCs could be loaded per day at this rate.

The chief executive also said that Aramco is looking at storage facilities “that are available also in [the] Kingdom and out of [the] Kingdom.” These include those in Japan, South Korea, the Netherlands and the Mediterranean.

When asked about the feasibility of US President Donald Trump’s plan to provide naval escorts for tankers crossing the SOH, Nasser stated that Aramco sells cargoes on a free-on-board basis where the buyer would bear the responsibility of shipping. He added that Aramco will “support any actions or measures that will help to deliver our products to our customers”.

For now, his focus is on the flexibility that the East-West Pipeline will bring to Aramco’s crude oil exports saying that they “built it with this in mind for contingency”.

He said: “You know, before the crisis [it] was processing somewhere in the neighbourhood of about 2.8m barrels a day. We always took a contingency to always look at what if this happens, and that’s why we built the capacity a long time ago.”

Nasser emphasised that the pipeline gives Aramco “another exit for our crude through the Red Sea”.